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Politically Acceptable Trade Compromises Between The EC and The US: A Game Theory Approach

Author

Listed:
  • Johnson, Martin
  • Mahe, Louis Adrien Pascal
  • Roe, Terry L.

Abstract

A model is developed to quantify the special status of agriculture in the US and the EC trade negotiations. The role of special interests are measured by a policy goals function (PGF) whose weights are estimated for each special interest group. The analysis searches for mutually acceptable, mutually advantageous trade agreements between the US and the EC using a partial equilibrium world trade model coupled with game theory. Results suggest that it is in the best interest of the US (resp. EC) 'for the EC (resp. US) to liberalize whi1e the other follows the status quo policies of 1986. Mutual gains in PGF values to both countries pursuing "large" liberalizations are unlikely to exist, although "small" liberalizations may give rise to "small" mutual gains. Altering each country's action space, and permitting compensatory payments to the most influencial groups yields trade liberalization, but free trade does not result.

Suggested Citation

  • Johnson, Martin & Mahe, Louis Adrien Pascal & Roe, Terry L., 1990. "Politically Acceptable Trade Compromises Between The EC and The US: A Game Theory Approach," Working Papers 51154, International Agricultural Trade Research Consortium.
    • Handle: RePEc:ags:iatrwp:51154
    DOI: 10.22004/ag.econ.51154
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    Cited by:

    1. H. Guyomard & L. P. Mahé & K. J. Munk & T. L. Roe, 1993. "Agriculture In The Uruguay Round: Ambitions And Realities," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(2), pages 245-263, May.
    2. Bullock, David, 1991. "Pareto Optimal Welfare Redistribution and the European Community's Common Agricultural Policy," WAEA/ WFEA Conference Archive (1929-1995) 321445, Western Agricultural Economics Association.
    3. Louis Pascal Mahe & Hervé Guyomard, 1992. "The CAP and the GATT negotiation : between political economy and mercantilism ?," Post-Print hal-01594130, HAL.
    4. Antimiani, Alessandro & Conforti, Piero & Salvatici, Luca, 2005. "Alternative Market Access Scenarios in the Agriculture Trade Negotiations of the Doha Round," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 6(2), pages 1-23.
    5. Binfield, Julian & Meyers, William & Westhoff, Patrick, 2005. "Modelling CAP Reform: Consensus or Conflict?," Conference papers 331431, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Bullock, David S., 1991. "Are Government Transfers Efficient? Problems In Testing The Efficient Redistribution Hypothesis," 1991 Annual Meeting, August 4-7, Manhattan, Kansas 271368, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Kozloff, Keith & Runge, C. Ford, 1991. "International Trade In The Food Sector And Environmental Quality, Health, And Safety: A Survey Of Policy Issues," Staff Papers 13325, University of Minnesota, Department of Applied Economics.

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    Keywords

    International Relations/Trade;

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